The stock market is set to react to the news that President Joe Biden has decided not to seek reelection, a development expected to lead to significant volatility.
A recent survey reveals that most Americans do not consider themselves wealthy even with one million dollars in assets. The announcement of Biden’s decision is likely to exacerbate economic uncertainty as Democrats work swiftly to rally behind a new candidate, with Biden having endorsed Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented that if Biden withdraws from the race, the immediate market response will likely reflect volatility and uncertainty. He noted that investors generally favor stability and predictability, and such a substantial political shift would disrupt those conditions.
This uncertainty may drive investors towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, this scenario could lead to a slowdown in the so-called “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. The Trump Trade reflects how the market reacts to the possibility of a second Trump administration, as investors respond positively to Trump’s pro-business policies during his presidency. Key sectors expected to benefit from a second Trump term include healthcare, banking, cryptocurrency, and oil stocks, alongside Tesla and the Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, stated that while a Biden exit from the race could cause the recent “Trump Trade” momentum to stall as the market reevaluates the electoral landscape, he does not anticipate a wide-ranging impact on the overall market.